Consumers Are Warily Confident

Americans are not really sure whether they should be confident about the economy or not. The Consumer Confidence Index, which is a composite of present and future confidence, has hovered around 50 for the past year. Still, this is better than the all-time low of 26.9 it dropped to in March 2009. (Source: Conference Board, Consumer Confidence Index, March 30, 2010)

What It Means to You

The Consumer Confidence Index is a lagging indicator. This means that most people don't feel the impact of what is happening to the economy until after it has already happened. When times are good, this index is around 100. Since the index has stagnated at around 50, it means people aren't sure if the recession has bottomed. The economy depends on confidence to grow. Confidence drives consumer spending, which makes up 70% of the U.S. economic growth.

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